Posted by Ronnie R on June 14, 2000 at 23:21:23:
Your lucky to have a guy like him! Usually they want to go lower! Thank your lucky stars Jim and hope you can get him all of the time .
Ronnie R
Am I Missing Something??? - Posted by Dan(FL)
Posted by Dan(FL) on June 14, 2000 at 21:20:05:
I am selling a house in Florida that I have rehabbed and I know that someone out there has come across this and I would appreciate some help. The selling price for the house is $59900. The buyer went to Suntrust bank today to see if she would qualify for the loan and she did(Prequalify). The loan officer suggested to her that I put that the selling price of the home to be $62000 so that she could mortgage the closing costs also. My question is, is this on the up&up or is there something lurking underneath that im not aware of. I told her that i would call the loan officer in the A.M. and talk to him about what my obligations are as far as closing costs before i will sign. She read to me what he had set up for her and it included title ins. and doc stamps in their closing costs. What other expenses could they spring on me?
I know many of the seasoned veterans out there have the answers to my questions and would appreciate the time taken to answer them.
DAN
Thank You All !! - Posted by DAN (FL)
Posted by DAN (FL) on June 18, 2000 at 09:02:10:
I appreciate all your help.
DAN(FL)
Re: Am I Missing Something??? - Posted by GIO
Posted by GIO on June 16, 2000 at 17:08:13:
not only can closing costs(all or part) be picked up in the sales price but some programs let someone other than seller pay part or all of the d.p. - if home will appraise there are ways to have the seller return some of the d.p. (e.g : work performed)
Re: Am I Missing Something??? - Posted by JPiper
Posted by JPiper on June 15, 2000 at 24:52:27:
Hi Dan:
Paying some portion of closing costs for the buyer is quite common. I do it all the time to make a deal work. There are alot of buyers out there who can’t quite swing both the downpayment AND the closing costs. I wouldn’t be chasing off a qualified buyer over something like closing costs…particularly if they are suggesting to raise the price sufficiently to cover those costs.
In this case, the ONLY issue would be whether the property would appraise for $62K. However, to tie down the details, you should agree in the contract to pay buyer’s closing costs not to exceed a certain amount…let’s say $2K. That way, they can’t “spring” anything on you now can they? And you also make certain that you end up netting what you intended to net.
To save yourself some aggrevation, the question you should ask the lender is what percentage in closing costs that you can pay. Loan programs may vary in what they will permit in the way of seller paid costs.
And by the way, the poster below who was concerned about taxes is wrong. If you pay the closing costs for the buyer, that amount will adjust the sales proceeds for tax purposes.
JPiper
Yes “Tax Consequences” - Posted by Alexander G. B.
Posted by Alexander G. B. on June 14, 2000 at 23:27:33:
Dan,
You would have to pay taxes on $59,900.00 but now you will pay on $62,000.00. That’s $3,000.00 Dan (Not Peanuts). I’d let her find her own way to pay closing costs!. Did someone say “CAPITOL GAINS” (I smell taxes) Be careful Dan. I seen a lot of investors GO DOWN BIG TIME! due to this. I would pass on this one and go find some good secure money, the deals are out there
Alexander
Re: Am I Missing Something??? - Posted by Jim Fox
Posted by Jim Fox on June 14, 2000 at 21:35:47:
Dan, This is done all the time. As long as the appraisal will work, and there isn’t any reason it won’t work, you will be fine. Have the loan officer give you a “Good Faith Estimate” (This is a specific document, not a generic term) just to make sure that after all expenses you will net out the cash you expected. The loan offecer can tell you exactly how high you will have set the selling to net out what you need to have.
Good luck, Jim Fox
Re: Yes “Tax Consequences” - Posted by SueNC
Posted by SueNC on June 17, 2000 at 07:17:13:
There are only 2 things that I can think of that will change a seller’s net with this increase:
- Real Estate commision owed on the sales price. If there was a Realtor, they would want 6% or so of the additional 3K- $180. But they would probably drop the extra if you balk.
- Revenue Stamps charged by the county/local authority based on transfer amount. (Here in Raleigh, $6)
“Tax Consequences” ??? - Posted by Dave T
Posted by Dave T on June 14, 2000 at 23:50:14:
I don’t see the tax impact. Dan’s purchase price is increased to cover the buyer’s closing costs, then Dan pays those closing costs from his sale proceeds. If he still nets the same amount how is his tax burden changed?
I am under the impression that NET profit is taxable – not the gross selling price. What am I missing here?